Why Social Security is a Ticking Time Bomb for Retirees

8.18.23: Audio automatically transcribed by Sonix

8.18.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every week. And today we are absolutely bringing it again. On today's show, we're going to show you why you need a tactical approach to your retirement. And we'll get you thinking about whether or not your retirement income plan is actually accounting for Social Security shortfalls. As always, I have the distinct honor and privilege of being joined by the one and only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today, brother? I am doing great, Mike. You know, I.

Producer:
I missed you on your very recent trip down here toward my direction in Atlanta. Yes. So hate that. But I know you. It sounds like you had a good trip.

Mike Zaino:
Yeah, we had a great trip. I got a chance to take in the Braves Yankees series. Actually only went to one game, but turns out the Braves swept the Yankees. And, you know, those are my two favorite baseball teams, so I was a winner either way. Got a chance to meet one of our colleagues that we've we've talked about several times and offered his books free of charge to anybody who wants them, Mr. Ford. Stokes So that was that was a treat as well. He got to join me at the game. And then, you know, the biggest thing is I got to hang out with some family for about, you know, two hours, two hours with my mom and, you know, a little bit more than two hours the whole game plus two hours with my brother. So that was an amazing time. Don't get to do it often, but I cherish every moment that I get to spend with them, for sure.

Producer:
Yeah, that's that's the important thing is that you do get to do it when you are able and I'm glad that you did. And I'm glad that you're you're back home and doing the show again, of course, this week. And this is, of course, money matters with Mike. Folks, if you're just tuning in or if you're a longtime listener of the show, we've been doing this for over a year now. And so chances are there are a lot of you out there who've been listening for quite a while. So we thank you for taking time out of your week each and every week to to join us there in the the immediate you know, Charlotte kind of metro area in Fort Mill there where Mike is located as well. We really, really, really do appreciate you because with you there without you, rather, there is no show. So we really do appreciate it. You can also get us as a podcast wherever you listen to podcasts, right? You can go to the website MoneyMattersWithMike.com that's money matters with Mike all one word.com or subscribe on your favorite podcast app as well. We also have the YouTube channel where we've got all kinds of great video highlights from the show that are updated each and every week and some special content just for you, just for going and searching on YouTube for money matters with Mike. And don't hesitate to call Mike Zaino with your financial questions. It's 704 560 1573 704 560 1573. It's the number that he and to the phone that he always has at his side and he will answer And if he doesn't answer, he'll return your call very, very quickly. That is I know what people appreciate about you, Mike, is that you are accessible and available. Yeah, I.

Mike Zaino:
Mean, that's a true story. One of the things that I cannot stand in this day and age in America, if I call someplace and number one, I have to press one to speak English, that drives me absolutely bonkers. And then number two, if I get stuck in a quagmire of automation pressing this and pressing that, and I've got to listen to all these different pre-recordings and then I've got to wait on hold and listen to God awful elevator hold music, right? That just runs on a loop. I mean, I'd honestly rather stick scissors in my ears sometimes, and so I hate when I have to, you know, do that and I'm subjected to that. And so I do make it a, you know, a point to answer my phone as much as I'm able. And if you have to leave me a voicemail, just leave me a voicemail with your contact info and I promise you I'll give you a call back.

Producer:
Yeah. I mean, you know, treat others as you would want to be treated yourself. And that is the golden rule. And that's the one that that Mike Zaino likes to live by each and every. Every day. Well, you know, folks in retirement, one thing to highlight here before we get into kind of the meat of the show and then the Meat on the Bone segment in just a few minutes, every day during retirement is a Saturday, right? So mean during our Saturdays as we're working, we take care of a lot of stuff, right? We go and we do things that we want to do, but we also mow the lawn. We, you know, fix things around the house. We run errands that we can't run during the week and all that stuff. Right. But we have a free informational report for you, our listeners, that explains how annuities can help you maintain a relaxed lifestyle and peace of mind during those golden years. And you don't want to worry about the stock ticker after you're retired, right? You want to have an income that you can count on. So just reach out, get that free report and schedule a complimentary consultation with Mike Zaino so he can get you started building a strong plan that fits your needs. That number one more time, folks, is (704) 560-1573 or money matters with Mic.com is the website. Well Mike a lot to come here on the show over this next hour. We will start of course, with our quote of the week momentarily. Are your retirement savings being tactically managed? We'll tell you what retirement you know or what tactical management should say is kind of define that for you.

Producer:
Find out if that is something that that you are taking advantage of or if maybe there are, you know, some other options that might can can tell you about that might be something that you need to explore for your retirement, maybe some things you haven't thought about. Right. So we'll we'll go into details on that, why your expense ratio matters. Do you actually know how much you're paying in fees? In other words, that's another huge question because so many people don't have no idea. Yeah, I mean, it will delve into it and show you kind of how those fees can just really be hidden. And so you don't know. And a lot of times, unfortunately, we'll say that's done on purpose. The fees are hidden so that people can just rake in money kind of, you know, under the table here. And and it never really be noticed. That is wrong. And we'll tell you how you can avoid that. Social Security. You know, we do a lot of Social Security talk here on the show. Things are going to have to change in that program or else some big cuts are coming. And this is really going to highlight how important an income plan is for you. We'll also have a quick discussion about the impact of the wildfires in Hawaii. Just a devastating, devastating thing there that's going on. We'll talk about not only the human impact, but also the economic impact that's being felt there on the Hawaiian Islands And then also this week in history to round things out. First, though, let's get things rolling with our Quote of the week.

Producer:
And now wholesome financial wisdom. It's time for the Quote of the week.

Producer:
And those words of wisdom this time around come from Daniel Kahneman, who is an economist and psychologist. And you'll realize how those two things kind of go together when you hear the quote here in a second, because it's it's it's kind of obvious and and very poignant, this quote. He was also a winner of the 2002 Nobel Prize in economic sciences. So he knows a thing or two here. And Daniel Kahneman said this money doesn't buy you happiness. But a lack of money certainly buys you misery. Love it.

Mike Zaino:
You know? Wow. Okay. And that is exactly what today's Meat on the Bone segment is going to be about.

Producer:
Hungry for something to chew on. Here's some meat on the bone.

Mike Zaino:
Not having enough money can indeed lead to misery on various levels due to the fundamental role that money plays in our lives and in society. It's essential for securing basic human needs like food, shelter, clothing, as well as health care. And without adequate resources, people can struggle to provide for themselves as well as their families, which will lead to psychological discomfort, physical discomfort, hunger, homelessness and even, you know, further health issues, because it's a constant struggle for survival. It creates that stress and that anxiety and that people, you know, just don't need, not in not in today's day and age. Right? So money opens up opportunities for education for you to be able to develop your skills, to grow personally and without sufficient resources. You know, you out there listening might find it difficult to access quality education, job training programs, or even the chance to develop new skills which can lead to limited career opportunities and hinder upward mobility. And I've discussed this before on our show in that, you know, so often unless you obtain a certain education level or a certain income level, you know, you don't have access to this type of information, which is one of the reasons, you know, that we do this show so that anybody who can just tune in right on Saturdays at nine or wherever you listen to podcast, actually get some meat on the bone that they can chew on. All right. So let's talk about, you know, health care. So adequate health care, believe it or not, requires financial resources because without proper medical care, without preventative measures, without treatment, people's health can deteriorate, which leads to a lower quality of life and increased suffering. Poverty can lead to social isolation because you might not have the means to participate in social activities, events, different gatherings. And that isolation can contribute to feelings of loneliness, depression. Often it can give you financial insecurity, which leads to chronic stress, anxiety, further depression and the constant worry about having to meet basic needs. You know, an unexpected expenses can take a toll on mental wellbeing. So what do you think about that, Matt.

Producer:
You know, it's so true. And and, you know, think on my life, any time that I have been in a situation where, you know, maybe I was, you know, earlier on in my career working a job that didn't pay a lot, you know, I mean, my first few jobs in like radio and TV just did not pay. They were in very small markets. They, you know, just didn't have necessarily the financial resources to be able to afford people who were just starting out in their career to pay them a lot. So that's why they got people who were just starting out in their career looking for that great opportunity. I'm so grateful for those opportunities. But one of the things that I learned very quickly was when you're not making enough money to meet basic needs is you can really I mean, that is just such a stressor. And you're absolutely right when you say that that can wreak havoc on your overall health, not just your, you know, your your emotional health, your mental health, but really can affect your physical health as well. It's all related. And that, you know, over stressed environment really just take its toll.

Mike Zaino:
It can lack of money can limit your ability to make choices that align with your values and your dreams and goals and aspirations. It can give you that sense of powerlessness, frustration. You might feel trapped in a circumstance that you can't change. Um, man, this is a big one. It really can strain relationships, right? You know, you talk about the number one reason for divorce, and that's money, okay? And it should never come to that. It can strain relationships within families, within communities, because typically, folks. Don't like to talk about when they're having issues with money and that that breakdown in communication, all that does is cause further emotional stress. And so forget about being able to pursue your hobbies or your interest in personal growth because those take resources. Okay. And. Being able to actually do that can create the sense of joy and the sense of accomplishment. But, you know, poverty unfortunately, becomes a cycle, and lack of resources can limit the access to the education, to the opportunities, which makes it difficult for the next generation to escape the poverty. And it perpetuates the misery over and over and over again. And, you know, there may be some of you out say out there saying, you know what, hey, anybody can, you know, do this or anybody can do that.

Mike Zaino:
But it's much more difficult when you come from that place. Trust me, I was not born with a silver spoon in my mouth. My mom was a single mom raising three boys. And, you know, I had free lunch going going to all the way up through high school. And it wasn't until I, you know, went to college on a full scholarship because I hadn't if I hadn't had that scholarship, I wouldn't have been able to go to college because there's no way that my mom could have afford it. So thank God that I was actually, you know, diligent enough in my studies and in my athletic to get a combination scholarship to where I didn't have to pay for college. Right. That gave me the opportunity to break out. And so, you know, while it's important to note that money is not the sole determinant of your happiness, it undeniably plays a crucial role in providing the foundation for at least a decent standard of living and the ability to pursue a fulfilling life.

Producer:
Yeah, and it's so important, too, to point out that vicious cycle that it can become. And I'm glad that you that you highlighted that because, you know, while, yes, we all can pick ourselves up by our bootstraps, as the old saying goes and make something of ourselves, it can be and usually is a lot more difficult for a lot of people who start out with a lot less because we're not starting from the same place. Right? You know, for someone who is maybe middle class, it's a lot easier for them to pick themselves up by their bootstraps and make something of themselves than it is for somebody living well below the poverty line who's been struggling their their entire life 100%.

Mike Zaino:
I mean, I look at the things that I had opportunities to do when I was living in that state and then versus the things that I have opportunities to do now. And they are literally night and day. So, um, yes, you can make a choice. And yes, there are things that you can do to break that cycle. But I mean, we as a collective society have to do better.

Producer:
Yeah, 100%. That is absolutely accurate. And folks, if you want to do better with your money, no matter where you are on your journey of life right now, whether you're toward the top, toward the bottom, somewhere in the middle, you can call Mike Zaino and he'll be glad to help you out with a plan to get you where you want to go for your financial future. (704) 560-1573. Once again, is that phone number 704 560 1573 You can also go to the website It's Money Matters with Mic.com. So at the beginning of the show, Mike, we sort of teed this up where we're talking about tactically managed retirement savings, right? So so are your retirement savings being tactically managed? That's a question that we want to pose to the listeners today because, you know, you might think that you're being very strategic with your retirement plan if you're very involved in the management of it. Right. But let's actually take a look between a strategic approach and a tactical approach to retirement planning here. Okay? This is like it's like definition time between these two things. So there's strategic asset allocation on one side, right? So strategic planning, which is a more hands off approach to investing to all of that, right? So it's hands off strategic asset allocation. It's more of a buy and hold, right? It's kind of like we've talked have talked about before, set it and forget it. You know, that's strategic asset allocation. It's good for the long term, a long time horizon, better for emotional investors because you're buying and holding. You're not, you know, going by the whims of your emotions in response to something that the market's doing on a day to day basis.

Producer:
And it does work for newer investors. Newer investors typically have, you know, less knowledge of the markets. They also typically have a longer time horizon to be invested. So that is what strategic asset allocation is, right? So let's compare that now to tactical asset allocation, which is more active management of your retirement portfolio. It involves more frequent trading. It's good for short to medium term time horizons, right? So if you're a little bit older, but you know, closer to retirement, it's something that you might want to think about. And that also requires that impulse control that you may or may not possess if you are if you are that emotional investor we talked about tactical might not necessarily be the best thing for you, but it demands more investing expertise. That's why you should be working with an expert, by the way. And then also both of them. There is an overlap here. We've got like a little Venn diagram that we're looking at with the middle of that Venn diagram being the overlap between the two. So both strategic and tactical have a low level of risk and focus on diversification of your investments. So there are several reasons, though, to consider that tactical approach, Mike, that we talked about a more, you know, a more active sort of management of your retirement. Sure. Let's talk about these seven reasons. And the number one thing here that we'll will mention is that increased protection from market declines.

Mike Zaino:
Right? So this is absolutely not the set it and forget it. Tactical management allows for, you know, adjustments in your asset allocation to help reduce exposure when that volatility creeps in. And that can help retirees avoid sudden and drastic declines in their portfolio value, which is ultimately going to provide more stability during a time when consistent income. Okay. We're talking about retirement is crucial. Okay. And so that's why, you know, you got that increased protection from market declines.

Producer:
Yeah, it's absolutely you know, one of the biggest advantages here And then also another huge advantage and and a reason to consider this tactical approach would be to avoid emotional investing. Right. Because, you know, we talked about that being emotionally triggered by things that that happen in the markets. It can be such a difficult thing. But think if you're working with a with a professional who's going to get you on a plan that's going to work for you, if you are more emotional person, you can avoid that, that pitfall.

Mike Zaino:
Yeah. I mean, and if you think about it in business in general, okay, it's best to leave emotion out of the equation. Even if you go to buy a car, if you're really, really excited about that car and the salesman is going to be, you know, licking his lips, basically, you know what? Behavioral biases they can impact investment decisions, especially during times of market volatility. But with a tactically managed portfolio that's guided by a well defined strategy that can help retirees stay disciplined and avoid making those impulsive decisions.

Producer:
Yeah, you want to avoid those as much as you possibly can and and that being 100% of the time, avoid it at all costs. Yes. Um, you could also receive the income that you need in your retirement, right?

Mike Zaino:
So, I mean, obviously if you're lucky enough to have a pension, you get a pension in retirement. Like I said, if you're lucky enough, um, if you're lucky enough to have Social Security, who knows if it's going to be there after 2020 or 2033. Then great. But retirees often rely on their investment portfolios to provide that steady stream of income just to cover their living expenses. And so tactical management can help ensure that the portfolio is positioned to generate income while minimizing the risk of income disruptions. And I think that's really, really key there.

Producer:
It really is. And another thing that's key is the number one fear of retirees even more than death itself. We've talked about this before on the show a few times, is running out of money.

Mike Zaino:
So think about this. Retirees need their investments, most of them to last more than a decade. So two decades, three decades, maybe even more. So a well managed portfolio can strike the balance between both generating the income as well as allowing for growth to ensure that the portfolio remains sustainable all the way throughout retirement.

Producer:
Here's another big one, Mike, that we have all become very familiar with in the past couple of years. Yes, outpacing inflation with your savings, man.

Mike Zaino:
And if you haven't listened to any of our inflation segments on previous shows, you might want to go back to the, you know, to the archives and just take a listen, because inflation can absolutely erode. It can eviscerate the purchasing power of what your retirement savings can do for you. So a tactically managed portfolio can include assets that have historically performed well during inflationary periods, which is going to help maintain the real value of your investments.

Producer:
Yeah. And then also managing risk over time because we've talked about this particular rule and put rule in kind of air quotes here because it's, it's the basic guideline and can be adjusted obviously for an individual circumstance. But managing risk over time through something like say the rule of 100.

Mike Zaino:
Yeah. Because a tactically managed portfolio, again, can help mitigate that risk by adjusting adjusting the allocations based on your age with the rule of 100. So if you subtract your age, I'm 52, that means I should be 52% safe, 48% in the market. Again, a general rule, I happen to be a little bit more aggressive, but the closer I'm getting to retirement, right, the less aggressive that I can afford to be. And once I am retired, I'm in that retirement red zone, whether it's the five years immediately preceding or the five years immediately in retirement, you just can't afford catastrophic losses. So mitigating the risk by adjusting the investment allocations based on market conditions and other potential risks is what tactical management helps you do.

Producer:
Yeah, it does. And then of course, it is. This one I think is the last one obviously on this list. But it's also, to my mind, probably the most important because everybody's situation, as we always say, is different and unique. So this is something that is designed with you and your particular situation in mind.

Mike Zaino:
Right? There is no cookie cutter. You're not going to drive into the subdivision and every house looks exactly the same. You're definitely not going to find that with us because each retiree has unique financial goals, has unique risk tolerance, unique income needs. And that tactical approach allows for that customization that aligns the portfolio with your specific circumstances. So again, not a one size fits all. Everything is based on your current situation, your goals, your dreams, your desires and your objectives, and putting a plan in place that helps you get from point A to point B.

Producer:
And that is really what you specialize in each and every day. Mike When you work with folks who are, you know, listeners to the show or people who have through word of mouth come across you and, and what you do as well. But it all starts with a free full retirement plan consultation. I mean, this is free of any cost and any obligation. So talk about that and kind of what that does for the listeners and how that can kind of get the ball rolling for them. Yeah.

Mike Zaino:
First thing I'm going to urge everybody to do is stop procrastinating, okay? Even if you have an advisor that you've had for years, don't procrastinate and get a second set of eyes because you may think that you're doing things that are in your best interest and they might not be okay. So what we do is we will provide a comprehensive consultation, absolutely no cost and no obligation. So you'll only end up working with us if it makes sense and is best for you. And bottom line will help you analyze the current financial situation that you find yourself in. We'll discover exactly how much you're paying in fees. We'll help you identify any costs that you can cut out of your IRAs, your 401 seconds or any other retirement savings vehicles that you have. We can definitely help you with Social Security maximization planning. We can help you with Medicare planning, because the four parts of Medicare plus all the supplements can be extremely confusing for those who are just now turning 65. We can closely examine any annuities that you might have because we've said it before, but your grandfather's annuities are not the same as those that are in place today. If you're having to pay an insurance company to pay you back your own money and then they charge you for it on top of that, that makes no sense, right? And then if you die, they keep it. Who does that? Right? But believe it or not, there are people that are in annuities like that. And if we see that, we'll absolutely rescue you and show you things that can be set up for growth, set up for income, still give you access to liquidity and a named beneficiary or beneficiaries. Okay. Bottom line, again, we're going to compare your situation to what's possible if you work with us and you will only do business with us if it makes sense, because it's your money, right? And if it matters to you, it matters to me.

Producer:
That is absolutely right. And you can go to Money matters with Mic.com to request that no obligation consultation money matters with Mic.com or the numbers. 704 5601573. Well, Mike, let's talk you know, we mentioned this earlier and you actually just kind of briefly went through it there in in the things that you will talk about in that, you know, free consultation, this is one of the biggies that people don't really realize what they're they're paying. You know, it's money that's going down the toilet out the door and you don't even know it. It's like, you know, you walk out the door money, all it just falls out of your pocket and you just don't know what's happening. Um, but yeah, fees can really be something that can can hold you back from the growth of your investments and your retirement plan that you should be getting. Talk about what an expense ratio is and why it's so important to know, you know, in general terms what yours is, but also to know what is kind of fair and what and what you should be paying.

Mike Zaino:
Yeah, I mean, it's simply an expense ratio is how much you're paying for what you're getting, right? So, so you take your management fees and you divide it by the total investment that you have in the funds. And a lot of people out there, a lot of, you know, advisors out there, you know, they're charging anywhere from a half a point, three quarters, a point, a point. I've seen two, 2.5%. And this is either on an annual or on a quarterly basis. Right? So all of our listeners should ask themselves an extremely important question How much am I paying in fees on my retirement savings? Because it might sound small. You were only paying you're paying, you know, a half a point, a quarter. Well, that's 2% a year, right? And if you look at that and you're with that advisor for 20 years, then you just paid 40% of your money, Right? Am I is my math correct?

Producer:
Yeah, that that sounds right to me. I'm not the best mathematician in the world, but that sounds right to me.

Mike Zaino:
2% a year. Times 20 years. Two times 20. That's 40. Right? That's a big chunk of change that you're giving away year in and year out. And, you know, just to have somebody manage your money. And I think that's absolutely ridiculous. So if you don't know the answer to that question or you can't quickly pull it up, then you owe it to yourself to find out. And I'd be more than happy to take a look at and identify the actual current expense ratio of your retirement savings. Because I mean, all the time we when we meet with people, we find out just how much they were paying in management fees. And they only really recognize that once they see the savings with us, they had no idea that their old advisor was overcharging for the management of their assets and they had them invested in bonds and in other investments that had heavy fees. They just had simply never been told about the fees that they were paying on the assets, such as target date funds. Right. Mutual funds, because all of those have their own fees associated with them. Had bonds and other similar assets. So if you are tired about worrying about your future and you're ready to work with somebody who sits on the same side of the table as you do, give me a call or visit the website. I genuinely love meeting our listeners and helping them on the road to their retirement success, and all it's going to cost you is a little bit of time. And as always, there's no obligation.

Producer:
Yeah, 100% there. You know, all you got to lose is just a very little bit of time if that. And I guarantee you you that won't be lost time that'll be gained knowledge, if nothing else, about your financial future and where you could go. And chances are, you know, Mike Zaino and you know, all of the folks there are going to find out that you can probably be doing better than you are. But if you're not, if it's not possible, then, hey, fine, keep on doing what you're doing. And that's great. No hard feelings go your separate ways, but otherwise you go to MoneyMattersWithMike.com, you schedule the consultation and chances are there is a better strategy out there for you.

Mike Zaino:
Chances are.

Producer:
Absolutely. Well you know and speaking of chances, boy, we're all taking chances right about now when we are looking at the future. If we are counting on Social Security to be there in its current form, because, you know, if things don't change, you know, there's this report, a new report out kind of reinforcing some things that we that we know and maybe even, you know, shining a big red flashing light above the things that we already know only for.

Mike Zaino:
The past year.

Producer:
Yeah. Yeah. That this is a report from CBS News, by the way, that Social Security is going to be cutting benefits in just ten years from now and that. That date. It kind of keeps creeping sooner and sooner, not just because time is passing, but because it feels like the trust fund is running out of money faster than anticipated.

Mike Zaino:
It was. I mean, I remember the first one that I got that even alerted me to it. It was 20, 36. Then they backed that up to 2034 and now it's 2033. So, you know, that's when they are forecasting that the trust fund reserves are going to be depleted, which could be substantial according to a new analysis. And unless that program is shored up before 2033. Get this the typical newly retired dual earner couple, okay. Is going to see their Social Security cuts, checks rather reduced by $17,400 a year, or, in other words, $1,450 per month, according. And that's according to the report from the nonpartisan Committee for a Responsible Federal Budget. What an oxymoron that is.

Producer:
Well, yeah, but even just saying the federal budget is kind of an oxymoron because we haven't really had one of those in a long time. But yeah, I mean, that's just when you look at that. Mike, as $17,400 cut annually for a dual earner couple. Boy, that's that's huge.

Mike Zaino:
I mean, 1450 a month that's gone. That is in. Yeah, I mean, huge. I don't know how else to put it. I mean that that can be catastrophic to those who are required or depending on that money. And hopefully that's not the case. If you've been listening to this show for the past year, hopefully you've heeded our warnings and are starting to take some control over that by putting a plan together, an income plan to not count on Social Security. And if it comes, then great. Hey, that's the cherry on top, right?

Producer:
Yeah. That the cherry on top of the the ice cream sundae, the gravy on top of your mashed potatoes, whatever, you know, metaphor you want to use food wise because that's just the kind of metaphor I tend to go for. That's what it needs to be seen as. But yeah, 1450 a month. I mean, that's, you know, could be depending on your situation, something akin to a mortgage payment or a couple of car payments or, you know, something like that. That's a huge amount. And a newly retired couple with just one earner, according to this report, would see a cut of more than $13,000. And that's based on current dollars. It doesn't forecast the impact on newly retired single earners, but Social Security Administration in the past has estimated benefits will be cut by 23%, almost a quarter in 2033 unless the program strengthen.

Mike Zaino:
And the effects of that, I mean, just just think of how devastating that is. Senior poverty is going to rise significantly if Social Security becomes insolvent. Right. And still, there are plenty of different proposals to fix Social Security's looming funding shortfall, either by raising taxes, increasing the retirement age. I've heard putting instead of 62 to claim age 70 to start claiming or a combination of the two. So relying on Social Security as a significant portion of your retirement income can be extremely risky for several reasons. Social Security was designed to be a safety net, but it was never intended to be the sole source or the major source of retirement income. And so we've put together a list of why it's important not to depend heavily on Social Security and then some steps that individuals can take to better prepare for retirement.

Producer:
And here are those reasons that we have compiled, because, you know, it's something to be concerned about given all of this data that we have been presenting here. Number one, limited income replacement, right?

Mike Zaino:
Social Security benefits are typically modest and they may not replace a significant portion of your pre-retirement income while you are working. Right. So depending solely on Social Security might result in a significant drop in your standard of living during retirement.

Producer:
Yeah, that's absolutely true. And then of course, an uncertain future, as we were just discussing.

Mike Zaino:
Yeah. I mean, so it's uncertain due to factors like demographic shifts, right? People are aging. The boomer generation, which was the largest generation with 10,000 people every single day turning 65. Right. That's huge. That's a big, big, big demographic shift. Then you have changes in government policies. And while the system is currently operational, obviously we know that there are going to be adjustments to the benefits or the eligibility criteria in the future.

Producer:
And then another big one, it keeps coming up because it has recently reared its ugly head. So it is. On all of our minds inflation.

Mike Zaino:
So Social Security benefits are adjusted for inflation, but the formula used may not actually fully keep up with the actual rising costs of goods and services, which means over time, your purchasing power of Social Security benefits is also going to erode.

Producer:
Yeah, absolutely. The dollar just doesn't go as far as it used to. And then your increase each year is not keeping up with that rate of inflation. So you just can't buy as much as you used to be able to buy. And there's also health care costs.

Mike Zaino:
Yeah, we talked about this in depth last week, you know, and in several other episodes in the past. Health care expenses, Guess what, folks? They tend to increase as you age. We say it all the time. The older we get, our bodies tend to break down. They deteriorate. Well, Social Security benefits alone might not be sufficient to cover the rising costs of medical care and prescription. So keep that in mind, you know, while you're preparing.

Producer:
Yeah, absolutely. So and then going kind of hand in hand with that. You know, people are living longer, right? It's longevity. That's another reason to not rely solely on Social Security.

Mike Zaino:
Right. We just mentioned that, you know, your retirement may last beyond a decade, two decades, three decades. Heck, even four decades if you're fortunate enough to take an early retirement. Well, depending solely on Social Security, that might not provide enough funds to support that longer retirement period and necessitate an income plan.

Producer:
Yeah, so so here's our thing. We don't want to leave you, the listener, with all this doom and gloom, right? We don't just present things to to scare you or to, you know, do anything like that. It's all to inform and to educate. And we lay all of that groundwork to say there's a better way to go forward for your future. With all of that in mind. So let's run through, Mike some steps here to better prepare for for retirement. Number one is to, well, start early.

Mike Zaino:
Yeah, start early. Right. So the best time to plant a tree. Well, that was 20 years ago. If you want to enjoy the benefits of that tree. Right. The second best time, folks, is now. So begin saving for retirement as early as possible because the power of compound interest can significantly boost your savings over time.

Producer:
As Einstein said, it's the eighth wonder of the world that compound interest and then also, you know, contribute to those retirement accounts. Don't don't overlook that at your at your job and make sure that you're investing the right amount in that.

Mike Zaino:
Right. So you definitely want to maximize your contributions to your retirement accounts, whether it's a 401. K, a 403, B, a TSP. If you're a federal employee, whether you have an IRA or a Roth IRA, you want to make sure that you are maximizing your contributions. If your employer offers any employer match, then you definitely want to at least go to, you know, match what they are willing to put in. Ask people all the time, you don't like free money and they kind of look at me funny. I'm like, well, you're not you're not, you know, putting in what your employer is willing to match, which means you're leaving money on the table. And they're like, Oh, never really thought of it like that. I'm like, Exactly. You know, But, you know, a lot of individual or independent business owners, too, they don't have their own solo K put in together or they don't or put in place. They don't have a solo. K They don't have a set plan. And so business owners often make the mistake of thinking that their business is going to be their retirement plan. And nine times out of ten, that doesn't happen. So make sure that you're setting up and you're contributing to your retirement accounts.

Producer:
Yeah, that's that's kind of like, you know, taking that Hopium for the for the, for your retirement.

Mike Zaino:
Hopium with an H.

Producer:
Yes, exactly. Trying to emphasize that H as much as possible there. But yeah, hope is not an investment strategy or a retirement strategy at all. So contribute to your retirement accounts there. Diversify those investments as well. Don't put all your eggs in just one basket. You know.

Mike Zaino:
And this may seem like common sense, but unfortunately, common sense isn't all that common anymore. So you want to invest your retirement savings in a diversified portfolio that aligns with both your risk tolerance and your goals. Why? Well, because diversification can help manage the risk and potentially increase your returns.

Producer:
This next point here, Mike holds some good news for anybody who is listening to the sound of both our voices at this moment, because you're doing this just by listening to this show. And this is educate yourself, right?

Mike Zaino:
The smart people seek the knowledge. Okay. Learning about various retirement investment options, tax implications, different strategies for optimizing your retirement savings. All of these are a positive right. Consider seeking advice from financial professionals and I happen to know a pretty good one.

Producer:
Yeah, well, me too. And he's right here. His name is Mike Zaino. You can actually give him a call anytime. 704 56015737045601573. He will pick up the phone if he's not asleep or if he's not otherwise occupied. Another point here, Mike, is to, you know, you've got a certain amount of money coming in, Right? But you might want to consider bumping that up by considering some additional income sources.

Mike Zaino:
So yeah, so I mean, just because you've retired a lot of folks after they have retired, calling me three, four, five months later going, Mike, I'm bored to tears. All right. So you might want to explore opportunities for additional income streams during retirement, whether that's working part time, whether that's doing freelance gigs. You know, if you're an artist, if you're good with woodwork, if you're good with, you know, playing an instrument or just turning hobbies into income generating activities. But definitely people should consider additional income sources and never depend on one stream of income.

Producer:
Yeah, there's a friend of a friend of mine who has always been very good at woodworking and stuff like that, who now has turned that hobby into a business that's becoming more and more lucrative. He's building furniture for people. It's great looking stuff and you know, he's got orders now backing up because of of that, you know, just turning something that he's always loved to do into a business. So yeah, definitely a good good thing to consider.

Mike Zaino:
Good on your friend of a friend. That's awesome.

Producer:
Yeah, it's really cool. And I'll have to send you some of the pictures sometimes because it's really cool looking stuff. Yeah. And yeah, and very well built too, I must say. Also pay off debt. I mean, this is huge because if you, you know, like we talked about earlier with, you know, poverty being a vicious cycle, debt is also a vicious cycle because it's once you're behind, it can be so hard to catch up. And if you can't catch up, then there's no way you can get ahead. And then make sure that you have an effective plan for your future because you're just trying to get caught up so that you can make those payments every month on all this debt you have going on. Right.

Mike Zaino:
And I'm talking about bad debt when I say pay off debt because their, believe it or not, is a such thing as good debt that can be used for leverage. But I'm talking about the revolving debt, that credit card debt. Right. The auto loans minimize those debts before retirement because those high interest debts can definitely eat into your retirement income. And always make sure to try your absolute hardest to pay off your balance at the end of the month. And if you can't pay the balance off, at least pay the statement balance off. So that means you're not paying any of that nasty interest.

Producer:
Yeah, that's the thing. We mentioned compound interest a little bit earlier. On the positive side, if you're taking advantage of compound interest, it can really add up to the positive in your retirement plan. But if you have credit card debt, if you have other high interest debt like that, it can really wreak havoc on your plans for retirement because it just compounds and compounds and compounds. You're paying interest on interest. And so it just is not a good situation. Not at all. Um, another thing here, Mike, to to be better prepared for your retirement, adjust your lifestyle. Mhm.

Mike Zaino:
Wow. It seems like I've talked about this before as well, right? Because you know, when you're in your prime earning years and I'm giving you a level of income using my hand, for those of you who are just listening, you may want to check us out on, on, on you know MoneyMattersWithMike.com so you can actually see what I'm doing. You're used to making this much but when you retire it's drastically reduced so a smart thing to do is adjust your lifestyle prior to retiring so that you can identify any short. Cummings As far as where you might be hemorrhaging and be prepared to make adjustments. So that might involve downsizing or relocating to a more affordable area or just making other changes that will help you reduce your expenses so that there's not as significant of a drop off when you actually do decide to, you know, cross over that threshold and enjoy your golden years.

Producer:
Yeah, that's absolutely right. Got to watch that. You know, those expenses and, you know, maybe make those adjustments. And speaking of adjustments. Also important is to regularly review and adjust, as we say around here. It's not set it and forget it. You set it, you put it into motion and then you review it. You make some adjustments as needed.

Mike Zaino:
Yeah, you got to think of your financial plan as a as a living evolving being almost. And you absolutely need to be fluid so that you, upon review you can change due to your changing circumstances. Well, maybe your goals change. Maybe you have shifts in your financial landscape, right? All of these things necessitate the ability to make changes on the fly. And ultimately the goal is to take proactive steps, not being reactive to a to a situation that you find yourself in, but proactive steps and create a diversified retirement plan that does not rely solely on Social Security. And by building a robust financial foundation, you can better enjoy your retirement years with a greater financial security and most importantly, peace of mind.

Producer:
Yeah, we talk about, you know, not as often because it's not so much of a thing today, but the the three legged stool of retirement. Right. Which used to be pensions, Social Security and whatever investments or savings that you had, those three legs will now that that stool is pretty wobbly and, you know, Social Security being one of those legs of the stool and that being a very wobbly leg, kind of like, you know, pensions have pretty much gone the way of the dinosaur here. You really do need a plan. You've got to be proactive. You've got to take action. And Mike Zaino can help you do that. You know, this is why we really here on on the show and Mike, every day in your business, I know you spend so much of your time and effort focusing on the strength of people's income plans. You know, you got to have those those paychecks to cover everyday expenses, the paychecks to enjoy your lifestyle, that free time that you're going to have in retirement, where every day, as we mentioned at the top, every day is Saturday. Right? So give Mike a call for your retirement income planning needs at 704 560 1573. That's 704 560 1573. You can also go to the website MoneyMattersWithMike.com and you can go there to find out a lot of great information about the show about Mike and reach out for that free consultation to get you started on a better pathway toward your golden years. Well, switching gears here, Mike, you know, we've been seeing the pictures online and on TV and social media and all, and it's just devastating what's been happening in Hawaii. I mean, on the island of Maui specifically, is where all these wildfires have been happening. Just as we as we talk about this approaching sort of the end of the show here. Just your thoughts about what's been going on in the pictures that you've been seeing.

Mike Zaino:
Yeah, I mean, complete and utter devastation. I mean, when when you hear stories of of people burning alive, I mean, that's got to be, you know, the one of the worst ways that being eaten alive, you know, but burning alive, you know. I'm at a loss for words because when when you have parents holding their baby, you know they're in the ocean and they're holding their children above the water, you know, to to to try to keep them safe. And and, you know, just just the bodies, you know, And I mean, it is an astronomical effect both on the human toll. Um, you know, not to mention the economic toll, which is obviously secondary. I mean, that Moody's had reported that the economic toll could be, you know, somewhere between 3 billion and 7.5 billion according to initial estimates that were released. But what about the human toll? Like how long is it going to take those folks that lived on that island to recover, if ever? You know, so our our hearts definitely go out to all of those affected in that area as they begin recovery efforts this week for sure.

Producer:
Yeah, definitely. So, you know, just just absolute devastation there. And and it's it's unthinkable seeing these photos. It's just like and the videos and stuff. It's almost like you're watching a movie or something like this can't be real. It doesn't look it. It really doesn't. It's just horrifying. And and the loss of life absolutely profound. The loss of livelihoods for people. Their businesses destroyed, their homes destroyed, all of that. You know, the the the stuff that they've owned and relied on to to make a living just gone. And so it's absolutely devastating. And one thing that I wanted to point out here, too, as we're talking about kind of, you know, money and this disaster is anytime anything like this happens, a disaster, some big, you know, change in in laws or regulations as well, We can we can say that will cause this as well to happen. Scammers are going to come out and be all over it and try to try to trick you into thinking that you're doing something good, but really just either stealing your money or your personal information. So you got to be so, so careful.

Mike Zaino:
Yeah, they're looking to take advantage of of the emotion, right? And when we talk about leaving emotion out of business, folks, this isn't business. This is humanity.

Producer:
And, you know, it's very, very important. Yeah. That you make sure that you're getting your information from the right sources and that you are giving when you want to give to the right sources. You know, Red Cross, for example, RedCross.org, go to that website yourself and make sure that you don't, you know, take you know, if you get a random text or an email that says it's from the Red Cross, don't necessarily trust it. Just go there yourself and give. And we hope that that you do because they could use all of our help right about now. Now we're going to get to this week in history momentarily. But I wanted to say first, if anything we've shared on this week's show makes sense to you, talking about, you know, planning your financial future or making sure that you avoid scammers. That's another thing that we are big on here, obviously. And maybe you could use some help planning your financial future with a no obligation retirement consultation. Give Mike Zaino a call. Once again, the number is (704) 560-1573. You can also go to the website it is MoneyMattersWithMike.com its this week in history so Mike on August 19th in 1909 it was a historic day because it was the first race at Indianapolis Motor Speedway that day it was built on 328 acres of farmland, five miles northwest of Indianapolis, Indiana. It was originally founded by a local businessman for testing purposes pertaining to the automobile industry, but of course, has since become the the raceway, the speedway that we all know it to be today. It's a rectangular two and a half mile track. It links four turns each, exactly 440 yards from start to finish. And just iconic and being, you know, over a 100 years plus now it's been going. So that is a great sports related anniversary today.

Mike Zaino:
It is 112 years ago. I'm actually later today, believe it or not, heading up to Indianapolis. I'm going to a buddy of mine and his wife. They're they're doing a big 25 year anniversary thing. And so we're going to go up there, I hope to maybe catch a glimpse of that iconic speedway. So on August 20th, okay. On this date in 1974, US Vice President Gerald Ford took over the Oval Office when Richard Nixon resigned. The old I am not a crook. Right. Um, well, Gerald Ford served as the 38th president of the US from 1974 to 1977. And a fun fact is that he was the only US president that was never elected to the position.

Producer:
Old Richard Nixon. I am not a crook. Spoiler. It was a crook.

Mike Zaino:
He was a crook.

Producer:
Yeah. And also, by the way, Gerald Ford also not elected to the vice presidency either, because Spiro Agnew was also caught up in scandal and had to resign before Ford was then appointed to the vice presidency, then became president. So he had the strangest journey to the presidency of of anybody in our history.

Mike Zaino:
Seems like. No doubt about it.

Producer:
Well, Mike, that'll just about do it for our time here together once again this week. Thank you, sir, for your time and all of your insights, as usual. And we'll talk again next time, sir.

Mike Zaino:
Matt, thank you so much for everything you bring to the table and me up to, you know, try to, you know, arm each and every single person listening with as much meat on the bone as possible. You do a great job. But most of all, again, thank you to our listeners. Without you, we don't have a show. And if you know anybody that needs the information, please, my name, my number, the website. It's not a secret. Share it. Okay. Get that information out there because a rising tide lifts all boats. Whatever you're doing this weekend, I hope you do it to the fullest extent. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with the financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573.

Producer:
Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owners. Amara Life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis, with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information. If money is on your mind, you're in the right place. This is Money Matters with Mike.

Producer:
Do you find budgeting too difficult or time consuming? Let technology do the hard work. I'm Matt McClure with the Retirement.Radio Network. Powered by AmeriLife. If you let out a sound of frustration when trying to keep up with your monthly income and expenses, you're not alone.

Nikita Turk:
Up until a couple of years ago, I was very anti the idea of creating a budget because a who has the time and b I know what I'm spending.

Producer:
That's personal finance expert Nikita Turk of Nerdwallet. She says her own personal experience led her to make budgeting a priority.

Nikita Turk:
When I actually decided to sit down and evaluate my finances, I realized how inconsistent I was being with my spending and by extension, my saving.

Producer:
Budgeting apps like Mint, Ynab or Honeydew can help you track and break down your expenses into categories like health care, groceries, entertainment and dining. Turk says there are other ways technology streamlines the process.

Nikita Turk:
They can be more convenient and easier to set up than some more traditional methods. They also do a good job of giving you a clear snapshot of your finances. Typically, budgeting apps will sync with your financial accounts in order to categorize your expenses.

Producer:
Tracking your spending this way is vital to see where your money's going so you can identify areas where you may need to cut costs. So are you ready to use technology to help you track your money? That's a key question to consider, and it's one of our 23 retirement cost cutters for 2023 with the Retirement.Radio Network powered by AmeriLife. I'm Matt McClure to get.

Producer:
Your free copy of 23 retirement cost cutters for 2023 give Mike a call at (704) 560-1573 or go online to. Money matters with Mikey.

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